One of the joys of working with Ben Fordham on 2GB is that he and his team ask me to cover interesting topics that most Australians care about. Today, however, they wanted me to cover Origin’s drop in share price, which I know wouldn’t excite many readers, unless you lost money on the 9.6% slide in the stock’s price yesterday.

That said, the share price is still up 13.61% for the year and 36.75% over the five-year period. That looks pretty good except if you were a shareholder over that time because the price fell from nearly $9 to just over $4 between 2020 and 2021 and has been slowly recovering.

By the way, if you were a long-term holder of this share, you once saw the price at $14.34 in 2011, so you’re out of the money, even now, if you bought it then!

The big question is this: why did the share price fall by 9.4% when core profit spiked to $1.18 billion — a rise of $436 million, which analysts tagged a “miss”? Apparently, AGL’s report card was better, so the experts who influence share prices — fund managers and big brokers — deemed it a disappointing result.

The irony to a normal person was captured by the AFR’s Angela Macdonald-Smith with this observation: “That was despite soaring earnings in the energy generation and retailing businesses after customers were hit with higher tariffs to make up for a rise in wholesale costs the previous year. Electricity gross profit surged by $1.1 billion”.

And Angela gave us an explanation and it came from the boss of Origin.

“If you look through the last several years, you’d understand that the result has really got an element of [cost] recovery in it,” Origin chief executive Frank Calabria said. “We’re a business that’s going to be investing in this transition, we need to be strong.”

So, it looks like it’s not win-win for Origin and Aussie consumers but loss-loss! We can’t expect Origin delivering lower energy prices because the company has been and still is investing in the future and it has gone along with 20% plus rises in our energy bills per year for a couple of years.

What future?

It’s one of the alternative energy sources and new age processes that will be positive for the climate being less dependent on fossil fuels, but it has come and will come at a cost. And the cost of power bills and why they’re such an impost will be at the centre of next year’s election.

However, that inevitable hot debate will have to wait for another time because I want to take this story and use it as an education piece for would-be players of stocks.

Despite the big dumping in the stock yesterday, until yesterday the experts who assess these companies really liked the business. The consensus rise for the share price was 15.7% and this table shows six out of six analysts liked the business going forward.

And the Swiss investment bank UBS is a big fan.

So, is Origin a buy?

Possibly, but I won’t be punting on it. Why? Because there are too many curve balls for this company, such as:

1. Energy prices that are influenced by OPEC+.
2. Governments could influence prices charged for political purposes.
3. Households now are generating their own power via solar.
4. Batteries are coming and smart households will link their solar panels to their Tesla!
5. We don’t know how long we’ll need coal for and what price it will be with the industry being shrunk.
6. And, importantly, many fund managers won’t buy businesses that are offensive to green-inclined investors.

The big lesson of investing I’ve learnt over the years is to avoid companies with too many curve balls being thrown at it. And Origin has a barrage of balls that could hit the company’s share price for a six!